Planned syllabus, coverage: see web book ‘handout’
Key goals of this lecture (and accompanying self-study)…
Dr. David Reinstein, davidreinstein.wordpress.com
Office hours: Tuesday and Thursday 11am-noon during Spring term (just come by); Streatham Court 1.39 unless otherwise mentioned. or by appointment calendly.com/daaronr/20min/.
My research interests
My teaching and projects
A farm-to-table artisinal more-ish curation of … Microeconomics: essentials, tools, and applications to business, policy, and life.
For ‘not straight Econ students’: a broad church; I’m sympathetic
Maths?
Lectures: 2x per week, interactive, won’t cover everything. Self-study required (see web-book etc.)
Readings and coverage: see Web-book (aka handout). The HANDOUT is king.
Roughly 8 problem sets– about 1/week on each chunk of material; (unassessed); questions come from exams or build exam skills
Support classes/tutorials about each fortnight, covering key material from recent problem sets
Extensive additional material (formative assesments, mock exams, tutorial videos, forums etc) to help you prepare for asessment, and for your interest
‘Midterm’ examination (Asking for week 6/7), multiple choice; 30 marks
Final examination, 120 minutes, MCQ, solved problems, short essays: 70 marks
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\(\leftarrow\) Five competencies…
1. Apply the scientific process to economic phenomena
3. Use quantitative approaches in Economics
4. Think critically about economic methods and their applications
Recommended: “Intermediate Microeconomics and Its Application” (11-12th ed. preferred; recent OK); £50 Waterstones, also at the library; get access
Note: Handout explains the coverage; not always sequential! And some material is in the handout only (clearly stated).
Lots of other free online texts, resources, esp.:
1. Economic basics (weeks 1-2)
Economic models, maths tools, introduction (NS ch. 1)
Utility, preferences, indifference curves, budget constraints (NS 2)
we build it up and then burn it down…
2. Build the model, put it together, examine it (weeks 3-5)
The Demand side:
Demand curves: Individual and market demand (NS ch. 3)
The supply side:
(Abbreviated: Production, costs, returns to scale, choice of inputs)
Profit maximisation and supply, perfect competition in a single market
Supply curves, entry/exit, Consumer and Producer Surplus, general equilibrium and welfare (brief)
3. How the market can go wrong (and how to maybe fix it) (weeks 6-7)
Market failures – Public goods
Monopolies; price discrimination as an imperfect remedy
4. Extensions to the model and applications (weeks 8-11)
Uncertainty (basic concepts, EU, risk aversion, investment choices)
Game theory; experimental evidence
‘Behavioural’: Limits to cognition, willpower, self-interest; applications and evidence
What’s gonna be on the exam??
Examples of exam material:
Practice problems in lectures and at the end
Problem sets, mock and sample question on the VLE
Previous exams (esp since 2015-16)
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Why are you here (in this lecture theatre)?
To learn.
Because you think it’s interesting
to ponder big questions about individuals, markets, society
to understand how people have tried to bring order to difficult questions
because you want to contribute something to the world
Because this stuff is actually useful in the real world
For your professional and/or academic career
For your life
To interact
Not to hear what the lecturer has to say, but for the lecturer to respond to what you say.
The VLE and other resources
VLE let’s see it
Ask questions and make comments on the forum LINK, I will monitor it
For now, available to you exclusively on the VLE
Contains all the lecture slide material and more, html links, etc.
Responseware, questions, polls and ‘chat’; ‘Kahoot’
In-lecture experiments and games
Ask me questions, especially at beginning and end
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Economists do not know everything (but we have thought through many arguments)}
Most non-economists do not fully understand these arguments, and they make mistakes, and they worry.
Markets work well but not perfectly.
Imperfections in existing markets \(\rightarrow\) opportunities.
\(\rightarrow\) ??
\(\rightarrow\) ??
\(\rightarrow\) Uber, AirBnb, ‘bilateral reputation systems’
Shyness and fear of ‘losing face’
Ties in to my research …
‘Economics is the study of the allocation of scarce resources among alternative uses.’
‘Economics is the study of mankind in the ordinary business of life.’ Alfred Marshall
The study of the (economic) choices individuals and firms make and how these choices create markets.
The tortoise and the hare
What do models give us?
There are different views of this
Assumptions \(\rightarrow\) Results
and sometimes \(\rightarrow\) testable predictions (if the assumptions hold)
So why learn these models?
A starting point
(Sometimes) make testable concrete predictions
Building insight, clear arguments, a way of thinking
Discussion is framed around them; seen as a ‘baseline’
Understand to be able to critique/extend
Principle 1: Scarce Resources
Principle 2: Scarcity involves opportunity cost.
Above PPF: opportunity cost of more clothing is less food.
Principle 3: Opportunity costs are (often) increasing
Studies of honeybees have found that they generally do not gather all of the nectar in a particular flower before moving on.
Why not?
Application 1.2 in NS text. Handout: some articles discussing this. Read at home, discuss
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Application 1.3 in NS text - (read at home, discuss)
Critical contemporary business challenges
Hey, ma and pa, what determines the price of a bread and the amount that gets sold?
Handout says: you can skip historical background, go straight to Marshall’s model
… Describes how a good’s price and the quantity exchanged are determined
I want you to be able to answer…
Marshall’s Model of Supply and Demand:
More challenging questions: see handout
LC: Ask students to draw for themselves, then draw standard supply and demand curves on the board here
to jog their memory.To respect yourself in the morning, know
Which factors cause the supply and demand curves to shift?
What causes ‘movements along’ the supply or demand curve?
Caveat, to avoid later confusion:
These models assume ‘price-taking’; neither buyers nor sellers consider the impact of their choices on pricesSee NS APPLICATION 1.4: Economics According to Bono, discussion and references in handout
Consider the effects on African farmers and African producers. How could we consider the ‘net effect’?
Read about this…
Testing assumptions vs testing predictions
Read about this
(See ‘problem set’ to be linked in handout shortly – I’ll announce it)…
Discussion question 6 from NS
Gasoline sells for $4.00 per gallon this year, and it sold for $3.00 per gallon last year. But consumers bought more gasoline this year than they did last year. This is clear proof that the economic theory that people buy less when the price rises is incorrect.
Do you agree? Explain.
2018 Midterm question (slightly changed)
2018 Midterm question - again, slightly adjusted
Solution: (A) Microeconomics is the study of the (economic) choices individuals and firms make and how these choices create markets.
Note that there may be only one correct answer
Math tools (some of these, will cover others ‘as we go’)
Empirical analysis
Introduction to Utility and choice (Time-permitting)